Thursday, December 4, 2008

Quick setup is safe setup

When setup reduction is first discussed, one of the concerns is whether safety will be compromised. After all, the thinking goes, it must be necessary to work faster to set up faster; and that can only lead to mistakes, and possibly injury.

What is found is quite the opposite: setup reduction leads to improvement in safety.

A key element in quick setup is standardization of all activities. This means that each activity is analyzed, and a standard set of movements for each participant is developed. Whether it is how to handle heavy items, or where to stand during their movement, for example, safety can be integrated into the standard work of setup. The need for precision in all aspects of the setup thus has a direct impact on safety.

Improvement in safety also comes from better organization and cleanliness, which are essential to faster setup. There are reduced chances for slipping, for unexpected sharp edges, and for awkward reaching or using incorrect tools.

Finally, setup takes place more often, and therefore there are more opportunities to find unsafe conditions and practices, and to correct them. Participants are also better practiced due to increased frequency of setup.

Sunday, November 30, 2008

Quality Improvement from Setup Reduction

Setup reduction is usually accompanied by quality improvement. Why is that? There are several reasons: equipment improvement, elimination of adjustment, and faster feedback on quality are the key ones.

Quality improves when equipment improves: Many machines need to be overhauled and improved as part of setup reduction. Bearings may be worn, there may be oil leaks that require repair, nuts and bolts may be loose, and filters and fluids may be due for replacement. All of these repairs can lead to improvement in capability and repeatability of the machine. This will improve quality. It is also usual to move all key gauges to one point, where they can be easily monitored. This improvement will allow the operator to ensure that the machine is working at an optimum setting at all times. Again, quality will usually improve as a result. Not only machines, but tooling will be improved as part of setup reduction. With more frequent setup, weaknesses in design will be found, and improved. More frequent checks of the last part in a run will ensure that the tooling is kept properly adjusted.

Quality improves when adjustment is eliminated: A key cause of variation in quality is variation in machine settings. Many operators are constantly making small adjustments. One operator sets the machine differently from another. This lack of process control needlessly causes defects and variation. Once the correct settings have been established, there is no need for constant adjustment. It is also frequently found that purchasing agents change vendors to get a better price. While the specifications are apparently followed in material selection, small variations will be found in material quality. Setting the specification properly can be a key element in the elimination of adjustment. This also leads to better quality. The higher yield achieved justifies keeping a tighter specification, and possibly somewhat higher prices. Looking at the system as a whole, rather than from a limited perspective, shows its importance in this instance. Looking upstream, incoming quality from internal operations will also be improved, as variation that causes extended setup time for extra adjustment is discovered and corrected.

Faster feedback leads to better quality: This is a key to quality improvement through setup reduction, as long as setup reduction is followed by batch size reduction. It is possible to improve the learning curve, and to speed up the feedback cycle, when batch sizes are smaller. If a mistake is made, in features, specifications, settings, and other aspects of the production process and product design, it can be corrected next time the product is run. Faster learning also leads to reduction and even elimination of inspection throughout the process. Not having large quantities on hand that need to be depleted should a defect be found, or a design feature changed, the time to improvement is shortened, and equally important, fewer customers will have been inconvenienced. Fast improvement to a feature can also have the beneficial feature of showing the market responsiveness to customer opinion.

Thursday, November 6, 2008

More economic arguments for setup reduction

In addition to the cost of acquisition, there can be significant expenses in actually being in possession of inventory, including, but not limited to:

- Borrowing costs of capital
- Cost of storage space – racking, storage bins, building space rent, lighting, heat, etc.
- Insurance
- Spoilage of inventory (e.g. obsolescence or deterioration)
- Theft, pilferage and other losses
- Damage to inventory – physical damage from lift trucks or during other handling
- Cost of handling to move or rotate
- Cost of management, measurement and accounting for inventory
- Cost of inefficiency due to inventory issues – e.g. layouts may be less than optimal in a large factory with large amounts of inventory
- Loss of business due to inventory problems – e.g. inaccuracies in inventory records that lead a business to assume that there is sufficient inventory, when there in fact is not, leading to overdue deliveries

A reasonable rule of thumb is to estimate that inventory holding costs can equal 25% to 33% of the inventory value each year.

Also considered by some is the opportunity cost – the value of other uses of the money identified above. It should be noted that opportunity cost is not a category in a financial statement.

Some estimates put the total cost of inventory as high as 50% per annum.

We have seen some of the benefits of quick setup:
- flexibility, for better customer service
- lower costs, due to less inventory

Other benefits to be explored are:
- improvement in quality
- improvement in safety
- improvement in general operations, due to need for coordination
- ability to work to customer order instead of forecast
- smaller factories improve communication
- improvement in problem solving
- ability to level loading

Wednesday, November 5, 2008

Setup reduction and flexibility - the economics

The above image shows how quick setup provides flexibility to an operation. By reducing the time spent setting up, it is possible to retain the original productivity, but reduce run size.

There may be marginally higher costs to initiate each order. These could include more material handling, more supervisory time (on paperwork, and the like), more maintenance time (on last off inspection to determine tool condition), more time spent preparing and cleaning up after each setup, and perhaps other similar activities. In the above example, the WIP was reduced by a factor of 12 (i.e. greater than 90%).

Depending on circumstances, the cost of holding WIP and finished goods is 30% to 50% annually (including opportunity cost). There is also a value to the business of the increased flexibility that is harder to determine – but it pertains to how well the customer is served, and what benefits this provides. It is mainly the cost of servicing return business compared to the cost of obtaining new customers. Furthermore, to achieve this level of flexibility, quality and maintenance must be very good, further reducing the cost of production.

Tuesday, October 14, 2008

Open eyes, open mind

It takes open eyes and an open mind to start the process of setup reduction. The psychology of observation tells us that in many cases, especially those we are familiar with, we mostly fail to see what is in front of us. We fail to notice, we fail to pay attention to what we see.

Observing a setup, either recorded or live, there is a lot going on. It is easy to assume that we know what it is that is taking place. Even when we analyze a video tape of a changeover process, assuming it captured the salient activities, we tend to write down what we think is taking place.

It takes an open mind to question each and every activity – is it necessary? why is it done this way? why is it done at this point? Especially when these questions are asked by someone on the team who has not done the setup personally, or is from outside the immediate area, especially if it is someone from the office, or someone without subject matter expertise, the questions may sound silly to those who are familiar with the process. It is especially those familiar with the process who need an open mind. The typical reaction is to want to explain an activity as making sense, as being the right thing to do.

It may take extensive 5Why, or Fishbone, or other root cause analysis, to determine whether an activity is actually needed, or whether it is done in the best way.

Monday, October 13, 2008

A story about setup

When North American executives started going to Japan to tour plants, having heard of the “Japanese miracle”, one of the things they wanted to see was quick die change. Many did not believe that the Japanese were telling the truth about press setups in less than ten minutes, when their own best efforts were not yielding anything like it, and their own people were telling them that it was impossible.

One group of executives invited to see such a die change, and to be present at a specific stamping press in the plant they were visiting 11 am, when the next die change would take place. Since they were not paying very close attention to the time, they got to the press about 15 minutes late, and all they saw that day was some cleanup activities around the press, which by that time was already making parts. Astonished, they asked what had happened. They were told that, as scheduled, the press was changed over precisely at 11 am. They believed that 11 am was just a target, not a fixed time in the daily plan. They were informed that, had the setup crew waited for the executives to arrive, the rest of the day would have been thrown out of whack for a large number of people who depended for their work on parts flowing from the press in precise quantities, at precise intervals.

The lesson they learned was that quick changeover exists in an environment of precision and standardization, that it is not an isolated aspect of the production system.

Tuesday, October 7, 2008

Role of skill

A key issue that will be confronted when reducing setup is the role of skill – and those that possess skill. The skill in question is the ability to get a piece of equipment or system to function properly after it has been changed over. As was discussed, many setups suffer from variability in both the tooling and the machine. Those with skill in setting up have the ability to quickly get settings correct, under the specific operating conditions of tooling and equipment. Material also suffers from variation, as does the environment, and all of these factors must be put into harmony by the skilled setup person or team.

SMED strives for a setup that requires no adjustment, no measuring, indeed, for a simple procedure that has been completely standardized. The skill that was formerly required to set up will no longer be needed to achieve a successful changeover. To speak to the concern that we normally feel when we take away the skill and replace it with standardization, it should be said that that skill must be “vested” in the setup – the knowledge of the factors of variation must be made explicit, and eliminated from the setup. How those who have performed the setups are involved in reducing the changeover time can be key to how well this reduction in achieved. Of course, engineers and others can study the elements of the setup, and determine how to control them, but such studies tend to be lengthy, and the results slow in coming.

What about afterwards? It has been said that no one will help to improve a process, if the result is the elimination of their job. First of all, the key result of setup reduction is not elimination of labor. Labor is simply just not that big a part of the total cost of production that it should be pursued as a primary goal. Of course, the history of industrial societies is one of less and less labor required per unit of output. So, labor reduction is inevitable. What needs to be understood, however, is that some of the labor saved needs to be used elsewhere to maintain, and improve, the new system created through improvement processes such as SMED. It is prudent, then, at the outset of a SMED program to assure those involved in changeover, be it operators or dedicated setup resources, that there will be no layoffs or terminations as a direct result of the program. Normal turnover, training programs aimed at those who have the ability to gain new skills, and other ways of redeploying people, are the best way to allay fears about involvement in SMED.

Monday, October 6, 2008


Standardization is not just for tooling or the element that is being exchanged. It applies to what is not being exchanged, the machine or permanent element. Adjustment becomes necessary if the exchanged element, or the permanent element, or both, have variation in performance. It is especially difficult to get right if both are varying from one run to the next.

Standardizing the tooling or exchanged element will not eliminate adjustment if the permanent element, a machine, system, or program, is not stable and standardized. There is thus a link between SMED and TPM, between setup reduction and maintenance. Wear, vibration, and other kinds of drift from the design condition all create problems that must be dealt with during setup. This kind of instability is particularly troublesome, because they cause the internal aspect of the changeover to take more time. If the condition is not known, or not dealt with during scheduled maintenance, then it must be dealt with, whether directly, or provisionally, during changeover. The second approach is, unfortunately, more common, because of the rush to get back up and running. Thus, the problem is faced again and again, with no chance for standardizing the internal setup procedure.

Careful observation is required to disentangle the sources of variation. Preventive maintenance and equipment improvement are necessary to eliminate variation in the permanent element of the production system.

Monday, September 29, 2008

Elimination of Adjustment

Adjustment is a major source of downtime due to changeover. It is closely associated with conversion of internal to external – the adjustment is done externally. One of the basic ideas behind conversion from internal to external is elimination of assembly during downtime. By a simple exchange of preassembled components, setup is reduced.

To eliminate adjustment, the preassemble component is adjusted externally, or all assemblies are standardized, so that no adjustment is required. Examples of external adjustment are pre-heating of plastic injection molds, and shimming of dies in a trial press. Examples of standardization to eliminate adjustment is using a common die height for all tooling going into a specific stamping press or injection molding machine, and the use of keyways and locating pins to place tooling in a precise position without the need to measure off a datum point.

In most cases, it will require detailed study to determine the relationship between final settings and the conditions of the setup – what factors are influential, and how to measure and adjust for them prior to starting the setup. Keen observation, statistical analysis, and trial and error are all useful approaches. The key approach is to insist that it is possible to understand the relationship, and to make the necessary adjustments beforehand. Chemical processes can be particularly difficult to understand completely. In many cases, simple approaches, such as cleaning, and maintaining a constant environment, including temperature and humidity, will go a long way toward reducing and eliminating the amount of adjustment required as an internal activity.

Saturday, September 13, 2008

Separate internal from external - not as easy as it sounds

We have indicated that the simplest and most effective way to reduce setup is to separate internal from external. But we have also indicated that there are many reasons why this does not happen. Some of the key reasons are:

  1. The person responsible for the setup is also the operator/value creator. This means that there is no time to carry out the external tasks while the operations are in process, since the operator is engaged in value creation. Many organizations are not convinved that a separate setup function can be justified, especially if customer demands are being met. Some organizations designate setup an “indirect” function, and follow a management metric regarding the ratio of “direct” to “indirect” labor – the higher the ratio the better. Another reason given for operators to perform their own setup is that this places full responsibility for the setup on one person. When efficiency or performance to standard is used as a measure of performance, it is thought that setup personnel will rush to complete the setup, and may not pay sufficient attention to quality.
  2. The scheduling system has a “standard” for setup, and the standard is being met. Consequently, there is no perception that setup needs to be reduced, especially if large lots are not understood to be more costly that small lots. Furthermore, the perception is often that faster setups are synonomous with simply working harder, or rushing and cutting corners. If customer demands are being met, the standard is unlikely to be reviewed. The fact that the standard may have been set without significant study, or even arbitrarily, is usually quickly forgotten by those setting up the scheduling system, and completely unknown to those who come after. It is even the case that when the standard is not routinely met, the extra time taken to set up is allocated to some other aspect of the reporting system, usually breakdown.
  3. For various reasons, what to do next is not communicated to those responsible for the changeover. Often, expediting is the way the next job is selected. This can be a result of “first come, first served” – reasonably so in, for example, a restaurant. Or perhaps there are constant change to priorities – again, reasonably so in, for example, an emergency ward of a hospital. On the other hand, in some instances, each sales person or manager believes that his or her job is more important, and selection is a result of last minute negotiation. It may also be the case that jobs take an unknown amount of time to complete, perhaps because of material shortages, breakdowns, labor shortages, and so forth. In this instance, the perception is that scheduling is futile, and one might as well wait until the job is complete before deciding what to do next.

It may thus be the case that there is a lot of change required, before the simple rule of separation of internal from external can be applied, to reduce setup. A strong vision of how to get to the point where setup reduction can be applied to significantly improve customer satisfaction while improving profits is required. This vision is encompassed by the term “Lean” or “the Toyota Production System”. We thus refer to “lean healthcare” or “lean manufacturing”, and other lean business systems. The key element is “flow”, or lead time reduction.

Friday, September 12, 2008

Steps to shorter setups

We have seen that separating the internal and external elements of a setup, and carrying out the external elements while the value is still being created, is the first and usually largest part of reducing setup time.

The complete list of steps to minimizing setup time is:

  1. Separate internal from external, and carry out external operations while value is still being created.
  2. Carry out the internal operations as several simultaneous operations.
  3. Convert internal operations to external operations.
  4. Simplify and automate all remaining internal operations to speed them up.

Briefly, these steps are understood as follows.

Carry out internal operations as several simultaneous operations: This is often referred to as “parallel work”. The typical image is of the race car pit stop, where four tires are changed, fuel is topped up, the wing is adjusted, and so on, in just a few seconds. Anyone who has watched a car race will have seen how this is done – utilizing five, six, or more pit crew. By analyzing the tasks of the pit stop, and dividing the work into tasks that can be done simultaneously, the internal work is done in a fraction of the time it would take if only one task was done at a time.

Convert internal operations to external operations: Many internal tasks consist of replacing and assembling several parts of a machine, a file of information, a kit of some kind, and any other setup that has several components. Take the above example of the pit stop – a tire change consists of replacing a tire mounted on a rim. By mounting the tire on a rim prior to the pit stop, what would otherwise be an internal activity (putting the tire on the existing rim) has been converted to an external activity, at the expense of having an extra rim. Another example is the use of a kit of materials, tools, parts, etc., that eliminate searching and selecting. A large part of internal operations that is usually considered separately is measuring and adjustments, to assure that the value creating operation produces an output that meets specification. By standardization, these operations can be eliminated.

Simplify and automate all remaining internal operations to speed them up: Further setup reduction allows value creation to more closely match demand economically, but safety, repeatability, and ergonomics must not be sacrificed. This calls for simplification and automation of tasks such as fastening, moving, data entry, and communication. Special tools and programs, codes and signs, design for changeover, and other similar approaches are utilized to gain speed.

It is, of course, also necessary to apply some of these techniques and technologies to the external setup. With shorter setups, and shorter periods of value creation between setups, external operations must be carried out in less time. This means better organization, simplification, mistake proofing, and automation.

Saturday, September 6, 2008

Shingo's insight: separate internal end external to reduce setup by half

Let’s look at what Shingo discovered about setting up stamping presses. He spent time observing the setup process, and had the great insight that there were two kinds of activities taking place: Those that required the press to be stopped in order to be carried out, and those that didn’t. Both were done while the was press stopped.

Typical activities that require the press to be stopped: unbolting the die, pulling it out of the press, bolting the die in place.

Typical activities that can be done while the press is running: finding the next die, and moving it next to the press, finding wrenches, and other tools, placing the new material next to the die.

Shingo called the first kind of activity “internal”, the second kind, “external”.

He found that typically, half the activites done while the press was stopped were external. As an industrial engineer, he realized that a bit of planning would yield a significant reduction in setup time. If the tasks that did not require the press to be stopped were done while the press was running, then the changeover would take half the time.

There are lots of reasons why internal and external elements are mixed – only one person is doing the setup, and there is no time to prepare, the next job isn’t chosen until the current run is finished, running the press and setting it up are separate jobs, and the setters wait until the run is finished, there is no pressure to set up quickly, the amount of time for setup is part of the schedule, so there is no need to rush, no one believes that setup can be reduced, everyone involved in the setup appear to be working as hard as they can, everyone hates setup, and want to stretch the run until the end of their shift.

The question that remains, once Shingo’s insight is understood, is how to put in place countermeasures to these reasons for long setups.

Friday, September 5, 2008

Setup - the great barrier to delivering more value

CUSTOMERS want different things, in different quantities, at different intervals – what we call VALUE. All value creators, be they manufacturing companies, service providers, such as healthcare, accounting, taxi drivers, or retail stores, community groups, government, and any other means of value creation, have customers. How they deliver value to customers has a significant bearing on the opinion the customer has of the value creator. There is no right or wrong in this opinion – it is just what the customer wants. When the customer has a choice of value creators, they mostly choose the one that delivers value as nearly as the customer wants it delivered.

As choice broadens, customers act more and more on their wants. But no two customers are alike – each one has different needs and desires. The value creator who wants to be the provider of choice to the largest number of customers, must be able to meet the broadest range of needs and desires. To do so economically is the challenge that has always faced value ceators – how to set up the value creating process to meet a multitude of different customer requirements.

Despite an increase in knowledge, about machinery, chemistry, information processing, ergonomics, consumer behavior, and all other aspects of the creation and consumption of value, it is still a challenge for most value creators to provide the low volume, high mix, offerings required to meet customer needs, in an economical and timely manner. The great barrier is setup – believing that it can be reduced, determining how to do it at relatively low cost, embracing it as a strategic business tool, simplifying it to sustain it, and constantly challeging the current method to do better in the future.

Success in setting up quickly and correctly is referred to as SMED or Quick Changeover. SMED stands for “single minute exchange of die”, and refers to the challenge of setting up a metal stamping press in under 10 minutes. Shigeo Shingo, who wrote “A Revolution in Manufacturing: The SMED System” developed many of his ideas about setup reduction from stamping press studies.

This blog is dedicated to exploring all aspects of setup reduction.